Why the Market CRASHED Today | The Truth.

hey everyone me kevin here the market

basically collapsed today

it was pretty bloody and i'm not talking

about like tuesday kind of collapse

where we have a larry kudlow v-shaped uh

you know kind of crash

you know the market opens up it crashes

we get to the lowest points we've seen

like tesla 610

and some of these crazy crazy lows in

stocks

but then we v-shape recovery and oh man

miss the dip unless you happen to be

live

either watching my live stream or

watching the market yourself

for that 15 minute period of time if you

woke up later in the day on tuesday

you would have missed the dip sorry

sucks but hey that's why we wake up from

market open and stay up for market close

and then just stay up normal hours after

that and basically never sleep

okay maybe that's not a good idea but

anyway today was

worse today was uh not a v-shaped

recovery today was uh literally a slip

and slide

straight down for virtually all

stocks there was no safety today we had

airlines down cruise lines down

tech down recovery stocks were down

you'd think oh maybe this is a rotation

from tech to recovery no

everything smashed shattered today

disgusting day

why what happened well i'm gonna keep

this as

simple as possible because it gets

frustratingly tricky and it doesn't need

to be

the market went down and there's a very

simple reason

why and a simple reason has to do with

bonds

the treasury bonds nobody wanted to buy

treasury bonds today now if you don't

know what a treasury bond is

let's put it this way let's say this is

a stack of treasury bonds

and the treasury department's like i got

i got three bonds i want to sell here

who wants to buy my bonds

and if you buy this bond the bond says

hey

this bond's gonna cost you say a

thousand dollars

and it's going to pay you twenty dollars

for every year that you hold it

and basically take a little coupon off

the end and go i'd like to redeem my 20

and then they pay you 20 and it's a

10-year bond so you got

you know 10 little coupons yeah that

that's basically how

bonds work and so there's a 10-year

there's a five-year there's a two-year i

mean there's there's so many different

kinds of treasuries at 30 years it

doesn't really matter they were even

talking about 100-year treasury bonds at

one point

but anyway the rates on these bonds

are rising they're rising

for a few different reasons but what's

most important is that they are

rising when these treasury bond yields

rise the market starts looking at that

as

hmm okay that is uh that's actually a

little bit tempting because

the more i get paid owning a

risk-free asset and when i say risk-free

there's an ascris

estrus there because there's really

nothing that's risk-free but a treasury

bond is deemed to be

risk-free because it's backed by the

full faith and credit of the united

states anyway

if you can get one point five percent or

two percent or two and a half percent

on a treasury bond where there is zero

risk why take risk and

let's say an s p index fund and make

five percent on your money if there's a

risk of a correction or a collapse in

prices

this is why when you have companies who

need cash

regularly like apple or whatever they

can't take all of their cash and just

yolo it onto a bunch of stocks because

they can't be exposed

to that market risk they want to be able

to go buy other companies or come up

with new products

they need that cash they park their

money in what are called

marketable securities this is why when

you ever look at an earnings report

which maybe you don't

but it's there you usually see the first

line is cash and marketable security so

those would be things like

treasury bonds okay so the treasury bond

yield

goes up and when the yield goes up it

actually becomes less desirable for

people to buy

stocks and there's a particular tipping

point

where that becomes very prominent

there are two points one on the 10-year

treasury bond

and one on the five-year treasury bond

on the 10-year

that point is 1.5 percent so when the

yield on the 10-year treasury is

over 1.5 percent stocks tend to sell off

in reaction to that

when the yield on the five-year is over

0.75

stocks tend to sell off in reaction to

that

well both of these skyrocketed past that

the 10-year treasury at one point went

well over 1.55

bloomberg reported it touched 1.6 for a

brief moment

the five-year treasury shot up the

fastest

his head it has ever shot up in over 10

years in over a decade

the five-year treasury shot up faster

than it ever has before

this spooked the market and we literally

tested

new low new low new low new low

throughout the day

we had a bunch of these in today's chart

except the trajectory of the entire

stock market's day

was down down down into the gutter but

wait a minute

why are these yields going up like what

is causing these yields to go up so we

get it

the yields going up on these treasury

bonds are leading people

to sell off stocks okay but the question

is why are these yields going

up we get now what happens when the

yields go up and how the market looks at

these thresholds for warning signs

but why why are these yields going up

there has to be a reason

and there is in fact there are four

different reasons now i'm going to break

down these reasons but first i have to

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there are four reasons why treasury

yields are skyrocketing

okay first let's go back to this bond

if somebody doesn't buy this bond and

the u.s government's like

hey we gotta we want to auction off

these bonds who wants to buy these bonds

and the government's like crickets like

nobody's there

they go okay what if we drop the price

of this bond you know instead of a

thousand dollars

what if we just charge i'm gonna be

extreme here half remember you at a

thousand dollars you were getting 20

right what if they said well what if we

drop the price half to 500

well all of a sudden you'll have a bunch

of people who buy it because the yield

just doubled in that case remember when

the bond was worth a thousand dollars

and the bond was paying you twenty

dollar coupons

that's two percent but if the price

comes down to 500

now you're paying 500 the coupon still

says 20 on it

that means the rate you're getting is 4

so the yield goes up

so in other words the yields or the

rates on the treasury bonds go

up when nobody wants to buy them so why

does nobody want to buy the darn bonds

four reasons number one massive stimulus

coming

1.9 trillion dollars of stimulus is

getting closer and closer and closer and

closer well guess how the government

raises the money to do all the stimulus

they sell treasury bonds they take out

another booklet and they go hmm

this booklet has 1.9 trillion worth of

treasury bonds

hey who wants to buy another bond

and when they have a whole another

booklet of bonds coming

people today are like why would i buy

the bonds you have right now you're

about to flood the market with a whole

set of

other bonds and when you flood the

market with a whole set of other bonds

we could just buy those at probably even

lower prices

because there are going to be so many

bonds available and as the supply of

bonds goes up

the price continues to come down so in

some sense people are anticipating

that more bonds are going to hit the

market and the price is going to come

down even more

and because stimulus is coming because

of that the rates go up

the second reason is strong growth

is coming to the economy now this is a

little bit of an ironic one

but the irony is people like man

why would i buy a 10 year treasury bond

and get 1.1

interest why would i do that come on man

there's so much opportunity in stock

market look at earnings

etsy beats airbnb beats beyond me gets

new partnerships i mean these are huge

huge like earnings season is so powerful

right now

so they're like why would i buy bonds

let's stay in stocks and ironically

that actually leads less buyers buying

bonds

yields go up which then hurt stocks it's

a disaster right

the third problem is people are

expecting inflation to come

when you expect inflation to come guess

what happens you're like

1.1 treasury yield or even 1.6 percent

treasury on the 10-year

nah man as soon as inflation comes

that's gonna be a joke

because if we're at 1.6 inflation or

worse 2

inflation i'm upside down on my bond i'm

technically losing money

the real return basically the return

you're getting the coupon you're getting

minus inflation is negative why would i

buy that crap

i'll wait for rates to go up and buy

myself some juicier bonds

and the fourth thing for like literally

there are four reasons why people are

not buying the bonds right now

the fourth thing is like why would i buy

bonds right now jerome powell's gonna

end up flipping and he's gonna end up

raising rates sooner than expected

anyway

why would i buy your crappy bonds right

now i'll just wait for dronepal to raise

rates and then i'll get my three percent

yield on a 10-year

yeah so literally four massive

reasons why people are like why would i

buy your bonds now come on man

again massive stimulus coming strong

growth coming

inflation and an eventual rate hike all

reasons why

right now we're not seeing people

actually flock to these bonds and as a

result these yields are going up and so

this then begs the question why are

stocks falling

again kind of going back to the stocks

question well it could be a multitude of

reasons i mean we've got the gme short

squeeze to cover short squeezes

you might have to sell some of your

longer term holdings like the apple the

microsoft's

uh you know the etsy's the expis right

these more bread and butter stocks the

redfin oh my god don't talk to me about

redfin today that was a disaster

yeah bad okay real bad uh redfin great

company but wow

anyway we don't have to talk about that

i got coffee

and that's okay but anyway so people

sell off these other stocks so they can

cover their short squeezes

okay that's one reason but also when we

pass those

thresholds that we talked about in the

treasury market well then we see stocks

sell off because people get nervous but

people aren't necessarily parking that

money into treasuries

to bring the yield down on treasuries it

seems like

people are selling stocks and then

they're either yellowing it on gamestop

or

more likely for businesses and

corporations maybe they're increasing

their cash right now

thinking well let's wait to buy bonds

let's sell off some of these other

stocks we have whether the hedge funds

or whatever

sell us some of these stocks we have

hold cash or

in some cases hold bitcoin which

ironically bitcoin was

very very stable today around 49 000

i'm actually really impressed which

remember if you want to buy bitcoin

go to metkevin.com bf they'll give you

uh 250

totally for free just for opening an

account uh and depositing money with a

block file so check that out

metkevin.com

bf okay so it did actually start

trending down a little bit

later in the day there was a period

where we crossed fifty thousand but

realistically

sitting between forty seven thousand

nine hundred and fifty two

or fifty thousand rather is about a two

thousand dollar swing

that's about a four percent swing on

bitcoin in the day

uh and that's a swing in the day right

that's not bad

compared to like the 10 sell-off we saw

in a lot of stocks today

so surprisingly bitcoin stable bitcoin

the more stable it

is the more people and more corporations

might actually end up moving into it one

of the biggest complaints about bitcoin

is its

potential volatility and that might be a

reason for people not to invest in

bitcoin because it's not predictable it

might not be predictable cash when they

need it

anyway all of this is happening by the

way at the same time as

valuations are kind of high right margin

levels are at record highs

we're at the highest point in margin

debt that we have been in in three years

and we're anticipating this rotation

from these tech stocks into

maybe non-tech stocks even though

everything got smacked today

so today was a complete disaster this is

a full explanation of all of the

different things

that are causing this problem today

whether it's stable bitcoin

the bond issues we talked about and the

four reasons people aren't buying bonds

margin levels being high maybe people

are out of money and they can't actually

go by anymore because

if you buy more on margin while the

market's collapsing you're actually

burning the candle at both ends of the

stick

you're increasing your debt and your

portfolio values going down and and you

increase the odds of getting a margin

call right

and this rotation anticipation totally

makes sense

it sucks you know diamond hand this to

the moon but folks

whoo i just lost lots of money

thanks so much for watching check out

the courses link down below for private

live streams and private chats

and lots of education folks we'll see in

the next video cheers

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